Recap 9th-13th December 2019
Last week was not very pretty for the US Dollar as its value continued to depreciate against a majority of major currencies. The main reasons were two key fundamental themes; US/China trade talks and of course the UK General Election. We saw the US agree a trade deal with China to prevent raising tariffs over the weekend, which caused US stocks to push higher and left the US dollar vulnerable.
As well as this, across The Pond the election victory for the Conservative party removed a large amount of uncertainty regarding Brexit and the UK PM Boris Johnson will be able to push his plans through Parliament with greater success. As a result of this, the Pound took off against the US Dollar Thursday evening, but did give back some of its gains throughout Friday. The Dollar Index (DXY) finished the week 0.50 lower om the week.
A rather interesting week technically for the Euro, whilst on the fundamental side it was the first meeting for Christine Lagarde as ECB President, however, nothing was really said to surprise or rattle the markets.
On the technical side, EUR/USD managed an important technical breakout and pushed through above a major falling trend line from June highs. But quickly sellers managed to come into the markets and left behind a big shadow, which has undermined the breakout of the descending trendline. EUR/USD finished the week at 1.1118, above the all-important 1.1010 support level.
A really great weak on the Sterling front with a conservative win in the UK General Election, the Pound hit a post-exit poll high of 1.3515, however, on Friday it gave back half of its gains and finished the week at 1.3328. This sell-off is looking rather attractive to dip buyers for the shorter term, unfortunately, for longer term traders Sterling is still looking rather cloudy. The next week will be the last full trading week of the year and we could see Sterling range trade.
The Week Ahead, commencing 16th December 2019
For the week ahead, liquidity could start to dry up, increasing the chances of impulsive, volatile moves when any important news is announced, so traders will need to remain disciplined and act carefully.
On the macroeconomic front we have rate decisions from both the BOE and BOJ on Thursday, however, these Central Banks are expected to leave interest rates unchanged.
We also we will receive another set of PMIs on Monday have CPI data from the Eurozone, the UK and Canada on Wednesday.
So be patient, expect volatility, and enjoy! Until next time, enjoy the seasons festivities and Happy Trading!